Crestron’s CEO Clarifies CEDIA Decision: ‘We Don't Belong There Anymore’

Crestron’s president and CEO Randy Klein emphasized that his decision was based on the realization that CEDIA has become a broader show and that Crestron only wants to focus on the high-end part of the market. He also noted that CEDIA (the association) and the residential market are separate from the CEDIA show and that his decision was not an indictment of the market, in which the company is fully invested.
Author:
Publish date:

Crestron’s president and CEO Randy Klein doesn’t do a lot of one-on-one interviews. Usually he lets his technology or marketing managers do the talking, while he remains in the background keeping his 3,000-employee company humming along in facilities around the world. But when “canned” comments from colleagues about his decision not to renew as an exhibitor for CEDIA 2016 seemed only to fan flaming rumors and speculation about the reason why, Klein stepped into the spotlight to settle the debate. During the ISE show in Amsterdam this week, he sat down with Systems Contractor News editor Lindsey Adler for a half-hour conversation, which has been excerpted here.

Image placeholder title

Randy Klein 

Klein emphasized that his decision was based on the realization that CEDIA has become a broader show and that Crestron only wants to focus on the high-end part of the market. He also noted that the residential market and CEDIA the trade association should not be equated with the CEDIA show. His decision, he said, was not an indictment of the market.

On the topic of internet and social media speculation about his company's decision…

“Nothing surprises me over how glorified things can become for the wrong reasons or misinformation or something like that. We had some prepared or ‘canned’ statements that went out, but then, through the powers of social media peoples' opinions and emotions come to the surface. First off, I think that’s great. Maybe it’s the epitome of ‘no press is bad press.’ But it shows that people care. It shows that we are relevant. It shows that people have a vested interest in things. There’s no such thing as a wrong opinion. It’s an opinion. I just wanted to respond on behalf of the company as president and CEO of the company.”

On who made the decision not to renew for CEDIA 2016…
“First of all, I take 100 percent responsibility for everything, and this decision is my idea. While we may have some 3,000 employees, we’re a very flat organization. I’m the president the company. We have less than a half a dozen vice presidents. We have no investors. We have no board. Nothing. It’s just me. I can decide anything I want to do. Some decisions I make are wrong. Some are right. I think for the most part, they’re kind of right because we’ve done pretty well over the years. I made this decision and started the thought process solely.”

On the accusation that Crestron is abandoning the resi channel…

“There are two different issues here, and they seem to be clouded and confused into one. There is a decision not to exhibit at CEDIA and somehow that has developed into the reference about us abandoning the residential market. They are absolutely two separate subjects. I’ll address the CEDIA thing because that is the simple thing, believe it or not. It wasn’t a thing that was brought up in recent times, in the last month. It wasn’t like one of the social media feeds suggested ‘a rift brought on by [CEDIA] hiring one of Crestron’s executives Vin Bruno.' It was a very simple thing. CEDIA, as an organization, has changed substantially over the years. And this is not me. You read comments everywhere, including one from Tom Doherty, the founder of CEDIA. There’s been a lot of change. I’m not saying anything about Vin Bruno or anyone in particular, but the organization has changed. Change is good. I’m a huge advocate of change. Some is good and some is bad. You have to learn from the change if you make a bad decision, and you have to learn from the good ones and build upon it.

But the organization has changed. The bottom line is that it has different stated goals or objectives that are quite different from our goals in the residential market. Let’s put things in proper perspective: It’s a trade show. It’s a three-day event. It’s one specific event, that’s it. Our business is made up of not only one week, but 52 weeks. And trade shows, for many manufacturers, that trade show is the venue. That trade show is the marketing strategy and venue. That’s not Crestron’s marketing strategy and venue. We stopped exhibiting at CEDIA for one simple reason: We don’t belong there anymore.

We certainly belonged there many years ago. Our company has helped shape and form this industry. People talk about leading an industry, and everybody says they’re a leader and this and that, and we say the same thing. But my definition of leading an industry is not being at the top of it. My definition of leading an industry is being able to help shape it and create it and form it and develop it and be a part of it. We brought this concept of high-end home technology and home automation and lifestyle technology to this industry. It was called Crestron Home, almost 20 years ago. We brought these panels and color touchpanels. We helped build many of these integrators’ businesses and the association. I’m not saying that they couldn’t do it without us, but we did play a significant part of that. And we played that significant part of it because we had mutual objectives and strategies aligned.

Today CEDIA, in our view, is not aligned with our strategies. Because we’ve changed too. We are clearly, 100-percent focused on the high end, and I want to clarify the word ‘professional’ technology. It’s not luxury. Luxury connotes that it’s only achievable by some and that may or may not be. But our products are professional and our technology is professionally purpose built. And we are on the high end—the pinnacle of that. And the association does welcome and embrace those kinds of companies. And, frankly, I don’t know how many of them are out there. So I can see it from the trade show or association’s context. There are not very many Crestrons out there. So, I can’t say to CEDIA, ‘You should only be a high-end show,’ because I’m not quite sure there aren't very many companies like us out there and we may be their only exhibitor.”


On Crestron’s target customer…
“Our customers are only the high-end, added-value integrator, not the people that sell tools, or vacuums, or remotes that you can buy at a consumer store. We sell to these people who have to add value to our technology. The bottom line is that over the years the show has changed. Like I’ve told some people, we’re a luxury car manufacturer and we used to go to this luxury car show and now there’s no more luxury cars. They’re mainstream cars. I certainly understand their strategy, because as a trade show (and we have to separate the trade show from the association) they have to sell booth space, and if anyone comes along as says, ‘I want to buy 10 million square feet of booth space,’ far be it that they refuse that. As a trade show, we just don’t belong there.

On Crestron’s continued support of the CEDIA trade association…
“We firmly support the association. We firmly support the organization. We fully support their membership. We absolutely will continue to support all of those things, and if the trade show does change (maybe Vin Bruno has different plans), by all means we’ll certainly consider coming back.”

On CEDIA’s reluctance to allow end-user attendees…
“I’ve voiced this to CEDIA several times: unlike ISE and InfoComm, they do not welcome [end users and influencers]. We had several architects and end users [want to attend CEDIA 2015], and we literally had to sneak them in under our badge. They don’t allow that… It is a truly trade show. They won’t expand it. These other trade shows have expanded and opened their doors and defined and aggressively added initiatives to attract these people. They’re critical to our business. Homeowners, interior designers, architects, and high-end construction people are critically important to our business, and if they can’t come to that one event openly and have a program that’s relevant to them and to see us and everyone else, we have to go find them—bottom line.”

On how Crestron will engage with CEDIA members outside of the trade show…
“How we engage with CEDIA outside the trade show is up to CEDIA. For instance, people here at ISE have organized a private tour of our booth for CEDIA members at the show. Again, we embrace and support CEDIA. Unless CEDIA won’t allow us, we’ll continue to participate in CEDIA’s education programs and other sponsorships outside of the [trade show] itself. Anything that they have, we’ll continue to support, until it’s [not a good fit].”

On how Crestron informed CEDIA of its decision…
“How did I tell Vin? I didn’t. Specifically what happened, Vin left us. He walked into my office one day and said, “I’m resigning. I’m going to CEDIA.” And I was quite surprised, and I certainly wish him the best of luck. He did a wonderful job for us and independent of anything, I still like him; he’s a good guy. The mechanical process of how it happened, at a certain deadline date, I think it was in November or December, we had to execute our contract, and our trade show manager called them up and said ‘We’re not going to execute our contract.’ That certainly worked its way around to Vin and he called me and then came in and talked to me. He still lives near our office, and I had the same conversation that I’m having with you: that it’s not at all reflective of our support for CEDIA or our support on our commitment to the residential marketplace. It’s just about the way the show lines up for us for our new renewed strategies. And they are renewed because we had messed around with low-end stuff, but we’re now firmly planted in the high-end professional marketplace. He understood it. Of course he would like a different decision, but it was final for 2016, and we moved on. It’s not an anti-CEDIA thing. It’s a pro-Crestron thing.”

On why Crestron is a unique brand…
“Our strategy for the residential business is an integrated, end-to-end platform. We make all the parts. We make audio systems, video systems, lighting systems, drapery systems. We make all of these parts, and rather than having an integrator build a lot of custom interfaces from a lot of different manufacturers, our strategy for the last 10–15 years was to build a lot of those components so we can provide a truly integrated end-to-end solution. One that is designed to work together. One that is designed to produce a different and better user interface, and we need to be able to show the end user that interface specifically. Other people make lighting systems. They’re just as good or better than Crestron, but when you take our lighting system and hook it to our control system, it provides an entirely different user interface and benefit to the end user, than connecting a third-party lighting system to our control system. So where do we have an opportunity to show that? I can show that down on this [ISE] show floor today, and we have meetings today with you name them, PayPal, eBay, Google, Microsoft. I don’t have that opportunity at other trade shows. I have to go and find other opportunities, and we are, through other sales initiatives and different events. We’re at the architectural show in in a couple of weeks. I’m not putting off the table that we might put on our own event. Not to compete with anybody, but we are a very unique company, many times we have to create our own menu. Just like Apple." 

On reaching the next generation of residential professionals…
“We have begun, for the past year now, gradually transforming our sales initiative to have an end-user- or client-based component in addition to a supply base. A year ago, all of our sales people only called on dealers. Today that scale is gradually shifting where at least half of our sales force will be calling on end users, commercial and residential, of various types. And half will be calling on the supply chain. So we’ll do it door-to-door, so to speak. We’ll do it with different types of marketing and public display events. We’ll go to high-end yacht shows and high-end builder shows. There’s a huge luxury yachting and marine show in Monaco. We exhibit at those to go to the end-user clients to show them that technology is a critical part of their house or their yacht. We also have six showrooms around the world. We just opened a brand-new one in Ft. Lauderdale, in the design center there. This is a multi-million dollar investment, strictly for interior designers and end users, to complement the ones we have in New York City, Beverly Hills, London, and Dubai. We reach out to people like that. Then finally, in this wonderful connected age, those people will find us too, when we message and strategize and market properly. And that right there is further confirmation of why no CEDIA.”

On the idea of creating their own event…
“I know we’re not Apple, but we can create a little mini Crestron World, and we have had preliminary discussions about that. But I don't want to do that today because then it looks like we’re dropping out of CEDIA to do that. It has nothing to do with it. It’s about developing a committed strategy." 

On not turning away from Crestron’s legacy in the residential market…
“The residential market has been a 30-plus-year commitment for this company. How many other manufactures out there can say that? Over those 30-plus years, we’ve helped thousands of dealers start and grow their businesses, and millions of end users enjoy and use our technology today. Would we abandon that? So many of us, including me, went to the first CEDIA (I set up the 10-by-10 booth myself). So many of us have our blood, sweat, and tears into this industry, technology, and customers. Would you give that up?”

On the fallacy that 20 percent is a ‘small percentage’ of Crestron’s resi business…
“People keep saying it’s a small amount of our business. It might be 20 percent of our business, but [that accounts for] several hundred million dollars of revenue. I’m not going to give that up! Is that small? And by the way, proportionally to the other part of the business, it’s far more profitable if you just looked at separating the two, but we don’t. What we do by looking at the other parts of our business, we’re able to develop technology, provide resources, and scale, and are able to afford multimillion-dollar design centers because we have a broad and diverse business. And it takes multiple parts, small or big, to be broad and diverse. I’m not going to give that up. That’s why it’s profitable.”

On Crestron’s embedded investment in residential products…
“We spend millions and millions of dollars in product development, specifically for this market. Both Home Elements and PYNG were five-year projects. We’re just now ready to release Home Elements in another month, after four-plus years. I guess we should quit and abandon a four years R&D away and I guess we should just roll up that PYNG and all of that stuff because we don't go to CEDIA! We just opened one of many-to-come Systems Test Labs. The first one is inside our R&D lab in New Jersey. They replicate homes, for lack of a better definition. These are systems labs where we put all of our products in, specifically for the residential marketplace, to test in real case-use scenarios instead of just putting it through its test procedure and shipping it. Technology is very complicated within the house. We just opened it up last week! If we were getting out of this business, would there be a press release next week that we’d closed it? I don’t think so.”

On the legacy of founder George Feldstein and CEDIA…

"Something that’s very personal to me is that our founder George Feldstein was honored by CEDIA with a Lifetime Achievement Award. I am not going to give that up.

One more time for good measure... 

"If you can look at all of those facts and conclude that by us dropping out of one three-day event that has nothing to really to do with our business, has anything to do with us abandoning the residential marketplace, then I’ve got nothing else to say. Leaving the exhibition was actually our confirmation of our commitment to the residential marketplace: it’s the opposite. It’s easy to just keep doing the same thing year after year. It takes courage. It takes money; I’m going to spend more money. People think we’re going to save money, but that was one event where we built a booth. Now I have to hire more people. I just hired a program manager. Hopefully soon we’ll be adding a vice president of residential systems. It’s a very important part of our business.

There’s one final thing to validate the importance of the residential marketplace that has nothing to do with size, while it may be only 20 percent of our business. All of the technology that we see in the commercial side of our business… everybody talks about digital media. Everybody talks about 4K. Everybody talks about 8K coming, right? That all comes from the consumer marketplace. It used to be the other way around; the commercial marketplace drove what the consumers saw. It’s not like that anymore. Fred Bargetzi, our chief technology officer, convinced me on the trade show floor of a CES show. He said, 'We’ve got to do this, because the rest of the world in consumer land is doing it.' That was 10 years ago. The consumer marketplace drives the technology for the rest of our business. If nothing else, we need it."

Related